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2016 (12) TMI 1078 - AT - Income TaxDisallowance of expenses towards speculation business - Held that:- Since there is no speculation activity in respect of this loss on sale of shares in the facts and circumstances of the case, the expenses disallowed would also become regular business expenditure and deserve to be deleted. We find that these facts were duly brought to the notice of the ld CITA who did not understand the same and simply dismissed the grounds as not pressed. We hold in the facts and circumstances that the expenses of ₹ 19,75,939/- does not attribute to speculation business. - Decided in favour of assessee Treatment of long term capital loss on sale of unquoted equity shares - Held that:- We find from the details available on record, that the assessee had sold the shares of unquoted share (i.e Herbicure P Ltd) at ₹ 8.65 per share which is much more than the break up value per share of the said company (based on its balance sheet) of ₹ 1.09 per share. We find that the assessee had incurred long term capital loss thereon and short term capital gains thereon in respect of two lots of shares sold by it depending upon the period of holding. We find that the revenue having accepted the said sale price per share in the event of deriving gains ought not to have disputed the same in the event of incurring losses as stated supra. With regard to Modipan Ltd, we find that the shares of the said company are listed in BSE and the prevailing market price was ₹ 13.75 per share and the assessee had sold the share on off market basis at ₹ 14 per share . Accordingly, we hold that the long term capital loss on sale of shares of unquoted shares (Herbicure P Ltd) and sale of shares of quoted share (Modipan Ltd) which was done on off market on which STT was not suffered, would be separately eligible to be carried forward to subsequent years - Decided in favour of assessee Disallowance of interest on borrowed funds on a proportionate basis - Held that:- We find that the details in the paper book vide pages 40 to 92 were not properly examined by the ld AO. Hence in the facts and circumstances of the case, we deem it fit and appropriate in the interest of justice and fair play , to set aside this issue to the file of the ld AO, to decide the same afresh, in accordance with law. Disallowance u/s 94(7) - Held that:- We find that the ld AR had stated that the subject mentioned shares of Opto Circuits Ltd which were sold within a period of three months from the record date were only to the extent of 100378 shares and dividend paid thereon @ ₹ 5 per share worked out to ₹ 5,01,890/- and hence agreed for disallowance u/s 94(7) of the Act to that extent. We hereby direct the ld AO to verify the veracity of this claim based on the examination of relevant documents in that regard and decide the same afresh in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard.
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